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Tue 9th Mar 2021 - Propel Tuesday News Briefing

Story of the Day:

More than three quarters of operators that switched to online sales during pandemic plan to continue post-covid: More than three quarters (78%) of operators that have switched to online sales during the pandemic – including DIY meal kits – plan to continue to offer them post-covid, according to a survey by hospitality specialist haysmacintyre. Its 2021 UK Hospitality Snapshot Survey of 141 sector operators also showed three quarters of respondents who set up delivery and takeaway services as a result of the pandemic plan to continue to provide these service as restrictions are eased. Pubs and bars led the charge towards new technologies, with almost half of those surveyed implementing ordering and payment apps as part of social distancing measures. For 95% of hospitality businesses, the technology is here to stay post-pandemic. Looking ahead, changes in working patterns and consumer preferences or behaviours and an ongoing adherence to distancing and hygiene measures were anticipated to be the three most significant impacts arising from the pandemic. Meanwhile, two in three (69%) operators believe trading levels will return to normal either by the end of this year or the first half of 2022. This was before prime minister Boris Johnson set out his roadmap to recovery and extended support measures were announced in the March Budget. Hotel businesses are the most positive about the future, with 83% feeling confident, compared with restaurants who were less optimistic at 53%. Pubs and bars were the least optimistic of the group, with 59% either uncertain or lacking in confidence for their prospects looking forward. Gareth Ogden, partner in the hospitality team at haysmacintyre, said: “One of the industry’s greatest strengths has always been its resilience. Now you can add adaptability and ingenuity to that list. Combined with the announcement in the Budget of extensions to various support measures for the sector, a new recovery loans scheme and hospitality grants, the hope is this innovation will aid the sector’s transition back to normal trading operations.”
haysmacintyre is a Propel BeatTheVirus campaign member

Industry News: 

Updated 1,600-strong multi-site operators list available for Propel Premium subscribers at end of March, biggest churn ever: During the pandemic, many businesses have failed and are no longer trading but a host of new operators have appeared in recent times. The updated Propel multi-site operators list is the most comprehensive guide that shows which operators are trading in the UK hospitality industry. The guide of circa 1,600 companies provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different, and what each business specialises in. In a new feature this year, there is a synopsis of what the business does and significant news associated with it. Propel managing director Paul Charity said: “The anticipation for this list has been phenomenal. Each and every day we have people asking when it will be ready. We’ve seen a lot of companies hit by the pandemic and no longer trading but there are many new operators with multiple branches or plans to go multiple that have been added to the Propel multi-site operators list. This is the most comprehensive list for UK companies with lots of useful information. It has taken three months to research and this list shows the biggest churn of companies we’ve ever seen – hundreds out of the list and hundreds in.” The updated list will be available to all Propel Premium subscribers at the end of March. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and regular columns from Propel insights editor Mark Wingett. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email

Punch to roll out virtual delivery brand created in partnership with Deliveroo: Pub company Punch is to begin the rollout of a new virtual delivery brand – Bull & Bird – after a trial of the concept, which it created in partnership with Deliveroo. First launched in three pubs in November, Punch said its new “dark kitchen” concept saw “immediate success”, selling out in two of the three trial venues. Encouraged by the sales, response from customers (average 4.7/5 rating on Deliveroo), and the pub’s ability to adapt to the new food offer, Punch expanded the trial base to a further 20 pubs. The company said it was looking forward to expanding the brand further in the coming weeks and it had another virtual brand in development. The Bull & Bird menu features freshly breaded fried chicken and loaded fries, and a range of beef and chicken burgers. Working with its insight partners, Punch said it had identified a reported increase of 98% year-on-year in spend on deliveries being made to people’s homes. Punch marketing and strategy director Russell Danks said: “We created Bull & Bird, not only in response to the trend in consumer behaviour but, more importantly, to allow our publicans access to a new income stream and consumer offer. Our pubs excel at providing outstanding service inside their pubs, and now they have a chance to serve customers looking to stay in and enjoy a takeaway at home via a virtual brand, separate from the pub. We are looking forward to expanding the brand further in the coming weeks and have another virtual brand in development. While I can’t say much about this yet, I can promise you it’s going to be epic!”

Bewiched Coffee MD proposes radical rethink of taxation mechanisms to protect UK high streets: A radical rethink of taxation mechanisms to negate the combined threats of e-commerce, technology and the pandemic to UK high streets has been proposed by Matt Fountain, managing director of Northampton-based cafe operator Bewiched Coffee. He argued corporation tax would not drive tax revenue from bigger businesses alone and instead has called for a variable VAT rate, driven by how the product was sold. He said: “The VAT treatment is lower and rewards businesses that are selling goods from physical locations on the high street and who are burdened with all the associated fixed costs. Then obviously a higher rate treatment for those companies that do sell online, the caveat being if those companies set up physical bricks and mortar sites in town centre locations then goods sold from those locations will receive the lower VAT treatment. The disparity could be as much as 30% VAT on an online sale and only 5% on a physical sale. I think a radical rethink could then drive those retailers back into the high street. This drives footfall into high streets and gives consumers more reasons to go into town centres. There will also be a huge lasting novelty factor akin to the Amazon Fresh stores for consumers to experience versus ordering at home online, as retailers are encouraged to get back into bricks and mortar sites.” Bewiched Coffee operates 11 sites. 

Use the power of the pub to level up, Localis report urges: Failure to support the nation’s pubs return from lockdown risks imperilling the government’s levelling up agenda for economic and social renewal, the think-tank Localis has warned. In its report “The Power of Pubs – protecting social infrastructure and laying the groundwork for levelling up”, Localis argued it was vital the lockdown roadmap was not allowed to slip back further for pubs, and the commitment to end all trading restrictions by 21 June must be delivered to return all pubs to viable trading. Without such assurances and medium-term support to help place the pub sector at the foundations of a strong recovery, the authors warned local economies and community resilience in left-behind parts of the country – including “Blue Wall” former industrial heartlands, rural and coastal areas – would be particularly hit. Among key recommendations, the report authors urged government to further reduce the tax burden on the pub sector to aid the recovery and called for an extension to the Business and Planning Act 2020. Local councils should be directed to help pubs by issuing licence fee refunds – paid for by the Treasury – for the six months to June 2021, through business support grants, the study advised. Additionally, where premises have been put to new community purposes during the pandemic, councils should offer a diversification grant to pubs looking to retain or expand the services they provided during lockdown. Localis chief executive Jonathan Werran, said: “As one of the biggest contributors to the UK economy, the sector has a vital role to play in the recovery and levelling up journey of the country as well as in maintaining community cohesion and social resilience well beyond the pandemic.” British Beer & Pub Association chief executive Emma McClarkin added: “The pandemic has fractured our communities economic environment and frayed our social ties. The pub is a powerful embodiment and symbol of both, woven into the fabric of our society and it is one we need to support and strengthen as we rebuild our trade as well as reconnect our communities.”

Rowland – we need development capital, not just survival capital: The sector needs not just “survival capital” but also development capital, as it enters into a new phase, Robin Rowland, operating partner at investment firm TriSpan, has argued. Speaking on Propel’s Friday Wrap video series, Rowland, who is also a non-executive director at Fuller’s, Caffe Nero and UKHospitality, said there needs to be a way found to put stimulus back into the economy and get banks lending to the sector again. Rowland said: “We need a long-term strategy to repair balance sheets. The government hasn’t given us that and it is a long journey for many businesses, and we need some understanding about how we are going to finance growth. Clearing banks are big institutions, they tend to be risk averse. My general observation as an investor is the banks are willing to support their existing investments but they are not allowing people, if you take the Coronavirus Business Interruption Loan Scheme, to invest in future growth capital. The banks have been very reticent to consider any further investment in this sector and the reason they are giving is not because it is toxic or a business they don’t like, it is because it can’t show any cash flow for the past 12 months. Well hello Sherlock, we haven’t been able to trade. They need to look back to 2019 numbers, take an educated view, as we do as investors, on what the recovery climb will be. Clearly, we have got 12 months ahead of trying to recover our businesses and then they should be looking at the year 2022-23 for any semblance of measurements against business success. The banks know the businesses they should be backing, but at the moment the computer says ‘No’, and someone needs to stop that and make them start lending again, and lending for growth, not for survival. They have a huge role to play.”

Tripadvisor launches innovation to help UK hotels reach ready-to-book, high-spend traveller audience: UK hotels and bed and breakfasts are being given the opportunity to expand their visibility and reach to a ready-to-book, high-spend traveller audience by Tripadvisor. The Tripadvisor Plus programme sees hotels receive special badging and increased visibility on the Tripadvisor platform, “helping them to stand out from the competition and increase bookings at a lower cost than traditional channels”. The programme is free for hotels to join, with no upfront costs and zero commission rates. For travellers, Tripadvisor Plus offers the ability to up-level their travel by unlocking insider savings, personal service, benefits and perks (such as a free bottle of wine upon check-in, room upgrades when available or spa credits), all available for an annual membership fee of $99. Discounted room rates available via Tripadvisor Plus can only be viewed by Tripadvisor members and can only be booked by Tripadvisor Plus subscribers, ensuring those rates are not widely available on the open internet. Tripadvisor Plus hotels get full access to all of the customer information from each reservation. Tripadvisor chief commercial officer Kanika Soni said: “Tripadvisor Plus is a game-changer for travellers and hoteliers. Travellers get to enjoy a memorable experience thanks to special perks and discounts – and hotels have a new way to attract valuable guests while avoiding hefty third-party commissions.” The programme launched in beta in the US in December and is now being made available in UK hotels. 

Government removes 50-employee limit to set up asymptomatic testing site: The requirement for businesses to have 50 employees in order to set up an asymptomatic testing site has now been removed by the government. This means businesses of all sizes are able to register on the portal to order free lateral flow coronavirus tests for employees. The deadline to register is Wednesday, 31 March.

Coffer – government needs to urgently cease the protection of the moratorium and provide a formula for repayment of rental debt: The government needs to urgently cease the protection of the eviction moratorium and provide a “statutory formula for repayment of accrued rental debt possibly over two or three years”, David Coffer, chairman of property advisory firm Davis Coffer Lyons, has argued. He said the move was needed “to avoid unprecedented business closures and unemployment levels across all sectors, including landlords”. He said: “Once a solid constant is in the equation, the rest is a matter of acceptance or finessing by mutually beneficial logic and understanding of each sides’ problems. It would be hoped funders would also be part of the directive. Something definite and positive must be announced soon or many companies, employees and stakeholders will suffer unprecedented and highly destructive consequences. We know there is a growing desire and willingness to acquire sites and with it the confidence that customers are ready to return – it needs certainty of the financial future for this movement to bloom.” It is understood the government will announce an extension to the moratorium on evictions from commercial property this week. It is thought the government will extend the moratorium, which was due to run out at the end of this month, for a further three months until the end of June. 

Job of the day: COREcruitment is looking for an experienced brand manager for a professional co-working space that has growth plans. The brand manager will report to the head of growth while working closely with the broader team. They will be responsible for organising, collaborating, and executing multi-channel marketing strategies that deliver key messages to a business and consumer audience. They may assist in the management of various agencies, such as PR, social media, creative, and/or digital media. The brand manager will ensure the reach and brand equity continue to grow, establishing the business as the leader of the premium flexible workspace market. Based in London, the position is paying up to £70,000. Anyone interested can email with their CV.
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Megan’s to transform derelict 1930s cafe in Clapham into latest site: London-based cafe and deli concept Megan’s is to convert a derelict 1930s cafe in the heart of Clapham Common into its latest site, Propel has learned. Terrace by Megan’s, which will be the company’s 11th site, will open in Rookery Road for take out on Friday, 2 April before opening fully later that same month. The site will offer an outdoor dining restaurant and takeaway deli serving all-day brunch, lunch, dinner and takeaway picnics. The menu at the new site will be slightly different to the brand’s other restaurants, with the company launching its sourdough pide pizzas. Megan’s, which is led by Sarah Hills, is also understood to have applied to open further sites in Chiswick and Dulwich Village.

Adam Handling promotes Nicola Gartenberg to executive director as he prepares to spend more time in kitchen: Nicola Gartenberg, previously operations director at Adam Handling Restaurant Group, has been promoted to executive director, and appointed to the board, with Handling planning to spend more time in the kitchen. Gartenberg joined the company four years ago, overseeing the openings of most of the restaurant group portfolio, and has been instrumental in helping the company pivot to a successful home delivery option, Hame, during lockdown. Handling said: “We have an exciting rollout plan for the group, triggered by the success of Hame, which is going to be steered by Nicola in her new role. And while I’m still very much involved in the overall development of the group, as its owner, lockdown has helped me to realise how much I’ve missed being in the kitchen. I’m going to be spending more time in Frog by Adam Handling, and am determined not to miss out on a Michelin star in 2022. Nicola brings an abundance of professionalism and determination, and everyone congratulates Nicola for her outstanding dedication to the success of the group.”
Rockfish lines up further opening in Devon, in Salcombe: Rockfish, the south west-based seafood restaurant group run by Mitch Tonks, has lined up a further opening in Devon, in Salcombe. The eight-strong business has submitted planning permission to open a 100-cover restaurant and bar overlooking Salcombe estuary. The Gresham House Ventures-backed company plans to invest £1m into the project, which would employ 30 to 35 people. Tonks said: “Salcombe is one of the most beautiful places in the country and we’ll be hoping to open in spring next year and look forward to welcoming people on foot, by water and car!”

Bubble tea brand Gong Cha brews up fourth UK site, in Newcastle: Gong Cha England, the UK-based operator of the Gong Cha tea brand, is to open a site in Newcastle. The company will open the outlet in Haymarket as part of the next step in its growth strategy. The Newcastle store will join its two in Manchester and one in Liverpool. Justin Liew, head of Gong cha England, said: “We have selected Haymarket for our next store as we are confident the people of Newcastle, who are keen to learn about new trends, will help us build the brand. The bubble tea trend has gripped Asia, Oceania and the US, where it is considered a Taiwanese speciality and now we are excited to introduce it to the city where we are confident the produce range will be very well received.” Gong Cha is the most recognised bubble tea brand globally, with 1,500 outlets in 20 territories including Taiwan, Korea, New Zealand and the US. Gong Cha, which translates as “tribute tea for the emperor”, offers a range of bubble teas that can be enjoyed with or without milk.

Arc Inspirations to launch training school, CEO to mentor bartender brothers as part of partnership: Arc Inspirations, the Leeds-based operator of a number of fast-growing brands, is to launch a training school to develop and upskill the group’s bar teams. The 17-strong operator of the Banyan Bar & Kitchen, Box and Manahatta brands is joining forces with bar entrepreneurs and award-winning bartender brothers Daniel and Joe Schofield for the ARCademy. The duo are shortly to launch their very own bar venture, in Manchester. As part of the relationship, Arc Inspirations chief executive Martin Wolstencroft will serve as a mentor to the brothers, drawing on his many years of hospitality and business-building experience to help them launch Schofield’s bar. Wolstencroft said: “This is a tremendous coup for us. To have the opportunity to tap into Joe and Daniel’s experience, knowledge and craft at this time is a game-changer for our people. I have known them for a long time and am really pleased we will have two of the best in the business helping us deliver the new ARCademy programme.” Joe Schofield, who was awarded “International Bartender of The Year” in the Tales of The Cocktail Spirited Awards, added: “Daniel and I are thrilled at the opportunity to be able to spend some time with the team at Arc Inspirations. Their alumni have gone on to do incredible things for the hospitality sector. We are excited to be part of the journey for the current Arc team, who without a doubt, will continue to shape our wonderful industry for the better.”

Goodbody advises caution on investment in Domino’s, sale of Swedish business will have little effect on net debt: Goodbody leisure analyst Paul Ruddy has urged caution on Domino’s Pizza Group investment ahead of the group’s 2020 financial year results on Tuesday (9 March) but has said the sale of Swedish operations to Eyja fjarfestingafelag III EHF will have little effect on net debt forecasts. Ruddy said Domino’s, which trades on 14.2 times FY21 EV/Ebitda (IAS17), bucked the trend of “meaningful earnings downgrades and capital raises elsewhere” and profit before tax will be flat year-on-year despite circa £8m of covid costs. He added the first half of 2021 “should see good like-for-like growth” because of the VAT capping extension and much of the dine-in sector being closed or restricted. However, the second half of the year would become more difficult. He said although Goodbody underestimated the length of the impact of covid-19 when it reduced its valuation of Domino’s to “Sell” in June 2020, it believed it is difficult “to argue in favour of a re-rating at this point” given analysis of its comparative sales figures for the past year. Ruddy added: “Future growth with be impacted by very well funded delivery aggregators [and] it will require some form of additional investment to appease franchisees if it is to achieve its goals of returning to higher growth. As a result, we remain cautious on the investment case.” On the sale of its Swedish operations, Ruddy said: “It is a positive to see another exit of an international market. The international business is reported as discontinued operations so this will have no impact on underlying profit forecasts. There is a small payment to exit the market, but presuming there will be a cash loss here in FY21 also, there will only be a small impact to net debt forecasts.”

Foodhub looks to raise £100m to turbocharge global growth: Food delivery platform Foodhub is looking to raise £100m in private equity funds to turbocharge its growth. Launched in 2017 by Ardian Mula and Mohammed Shakil, Foodhub has established a turnover of about £30m in three years due to accelerated expansion across the globe and month-on-month order growth. In the past year alone, Foodhub has begun trading in new territories across several continents, including the USA, Mexico, Guatemala, Ireland, and New Zealand, as it continues to add new international markets to its growing portfolio through acquisitions. In addition, the multimillion-pound takeover of Eat Appy at the start of 2021 has seen Foodhub enter the Australian market. Now, the brand is setting its sights on further growth, looking to raise £100m to support its expansion plan. Aside from developing further global acquisitions in 2021, the private equity funds will be used to develop Foodhub’s existing operations in several territories, expanding the workforce across the globe and helping the brand to continue to refine and develop its offer while continuing to challenge the bigger players in the market. Chief financial officer Mohamed Chaudry said: “Now we have footholds in dozens of countries we’re looking to expand our offering in each territory fast. The £100m of private equity funding will help to bring smaller takeaway aggregators under the Foodhub banner through acquisitions, as well as help us to scale up our operations in each location.” Based in Stoke-on-Trent with staff in India, Australia and the US, Foodhub has 22,000 takeaways on its books and the brand grew 160% in 2020, after a huge swing towards takeaway orders during lockdown.

Academy Coffee and The Depot sign for Swansea scheme: Family-owned coffee shop concept Academy Coffee and Cardiff’s biggest independent events brand The Depot are to open sites inside the redeveloped Albert Hall in Swansea. The £8m refurbishment of the former opera hall on the corner of De-La Beche Street and Cradock Street is being led by Loft Co. It is restoring the 157-year-old building to create a mixed-use development. Academy Coffee will take space in the scheme. The group originated at The Pumphouse in Barry, and now has several venues across south Wales – in Barry, Cardiff and Penarth with another in Newport under construction. It plans to operate an all-day venue in Swansea, serving coffee and light lunches during the day, transforming into a cocktail bar and lounge by night. Meanwhile, The Depot, which started life as a pop-up in Cardiff in 2014 before opening a permanent site in the city, will open its second live music venue. The Swansea site will have capacity for 800 people. The scheme will also feature a boutique aparthotel and spaces for lifestyle businesses and offices. The full refurbishment of the building is expected to take between 12 and 18 months. 
Positive updating to forecasts at Greggs by Goodbody: Leisure analyst Goodbody has positively updated its forecasts for food-to-go operator Greggs to reflect its strong second half of the year. The analyst has updated FY20 revenue and profit before tax forecasts to £811m (versus £770m previously) and minus £14.3m (minus £65m previously) respectively, ahead of Greggs FY20 results on Tuesday, 16 March. Issuing a “Hold” note with a target price of £21.50 from £15, leisure analyst Jason Molins argued: “This reflects a strong recovery in the second half of 2020 with fourth quarter company-managed like-for-like sales at 81% of 2019 despite varying levels of restrictions. The franchise and wholesale businesses performed even better given their exposure to sites accessed by cars and retail respectively. We also upgrade FY21 revenue by 6% to £1,064m (up 31% year-on-year) reflecting the higher FY20 base and greater level of net new store openings (up 100 as guided versus 50 previously). The improved operating leverage should see a substantial recovery in profit before tax to circa £69m (versus £114m in FY19).” Molins stated the group’s digital offering performance in the year to date will be of interest because delivery accounted for 5.5% of co-managed sales in the fourth quarter (versus 0% in FY19) and he suspects this will have grown further in the first quarter of 2021. He added: “Despite the continued challenges related to covid-19 in the near term, Greggs is well placed to win over the longer term underpinned by its vertically integrated model and the continued rollout of its digital platform. However, we consider this strong medium-term outlook to be largely captured in the group’s valuation, trading well above the top-end of its historic range on a FY22 price earnings ratio of circa 24 times. We consequently reiterate our ‘Hold’ recommendation with a new target price of £21.50.”
Cook My Grub passes £300,000 crowdfunding target within days of launch: Online food delivery marketplace Cook My Grub, which offers home-cooked food from trained chefs, has passed its £300,000 target on crowdfunding platform Crowdcube to expand. Within four days of its launch, it has received 109% of funding – raising £328,667 from almost 200 investors. The company is offering 9.87% equity in return for the investment, giving a pre-money valuation of £3m, with shares valued at £2.67 each. Cook My Grub is operating in Berkshire, serving customers in Maidenhead, Marlow, Slough and Windsor. Further rollout of the service is planned with launches in Reading, Swindon, west London and parts of the Home Counties through 2021. The pitch stated: “Finding time to cook is a luxury many people don't have. As a result, many people end up resorting to frozen meals. We believed a digital platform was needed to help those people connect with qualified home chefs. Cook My Grub was conceived to provide a healthy and sustainable alternative for people unable to cook wholesome meals at home. Each customer is presented with a wide selection of cuisines to choose from. These meals can be ordered on the day or pre-ordered several days or even weeks in advance. For home chefs, we set up their own ‘virtual restaurant’, which gives them the flexibility to decide when, what and how much they cook. The funds raised will be used to support further growth by increasing marketing, scaling-up operations and growing the technology teams.”

£3m plant-based restaurant and rooftop bar to open in Leeds: A new £3m plant-based restaurant and rooftop bar, The Green Room, is to open in Wellington Street, Leeds. It is a collaboration between young entrepreneurs Will Habergham and PJ Gardner. The pair have worked for the past decade in events, music and festivals and crossed paths while working the club scene. During the pandemic they have been working to transform a historic former members’ club. Habergham said: “The rooftop terrace is our USP, and due to covid, outdoor spaces are vitally more important. The terrace’s size not only allows people to sit comfortably in an outdoor space but also allows [us] to put any future social distance measures in place. In the winter months, we plan to utilise the space for pop-up markets or similar outdoor events that have become so much more important over the last year.” The Green Room will offer a range of plant-based dishes and will use ingredients sourced locally and ethically. Gardner said: “We want to be pioneers in the plant food business and The Green Room will be at the forefront of changing people’s perception about what plant-based food is.”

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